The World Turned Upside Down

Since Margaret Thatcher, around half of all public lands in the UK have been sold off. The next Labour government must stop this privatisation - and rebuild our commonwealth.

Brett Christophers’ new book, The New Enclosure, has recently brought to public attention the greatest privatisation of recent times; that is, the privatisation of publicly-owned land.

Since the advent of Margaret Thatcher to Downing Street in 1979, Christophers claims that 2 million hectares of land (equivalent to 10% of the land mass of Britain) has been sold off to private interests. This has left another 2 million hectares within public ownership, with a current estimated value of £420bn. Put into context, no other UK privatisation has been worth a tenth of that sum.

The impact of this hidden privatisation has been disastrous for our nation’s ‘social infrastructure’. Through this mechanism, the country has seen a great loss of publicly-owned parkland, leisure facilities, public waterways, school playing fields, libraries, hospital facilities, and key infrastructure.

Though much of this will be recognisable to readers of Tribune as part of the impact of austerity, these policies have been embedded into the British policy landscape for decades, spanning different governments. As the mayor for Salford, this huge privatisation push has impacted upon my local authority as it has many others.

One key example of this has been the expansion of Peel Holdings, a former textiles firm from the North West, which has become one of the country’s largest landholding bodies in the north of England. In 1987, Peel Holdings acquired a majority share in the Manchester–Liverpool Ship Canal from Manchester Council (attaining a 100% majority share by 1993). As early as 1992 this investment was already paying off, with Peel registering a £7 million profit from the canal that year.

This purchase was part and parcel of a string of acquisitions for Peel, primarily in the north-west of England, which had begun with their acquisition of 12,000 acres of land from Bridgewater Estates Ltd. The group went on to acquire other key pieces of infrastructure, including Liverpool Airport, Finningley Airfield, investments in Sheffield City Airport and Clydeport dock in Scotland.

These investments have been hugely profitable for Peel, and a testament to the long-term approach to strategic planning taken by the organisation. The group now wields significant influence over the economic strategy for the entire North West, integral to some of the UK’s most ambitious long term industrial infrastructure projects (such as Port Salford — the re-opening of the Manchester Liverpool Ship Canal to open sea freight).

In the 1980s, Peel acquired a majority shareholding in the Manchester-Liverpool ship canal.

But Peel’s strategic planning has been mirrored by a relative lack of local authority and public sector ambition. The short-sightedness of local authorities and the public sector in allowing key infrastructure such as ports and airports to be owned by or sold off to the private sector is thrown into stark contrast when compared against the example of Manchester Airport, owned and controlled by the ten local authority districts of Greater Manchester.

The Manchester Airport Group reported revenues of £818 million in 2018, paying out a huge dividend of £71 million to the cash-strapped local authorities which own it. Through times of austerity, this money has been a lifeline for local authorities like my own. The huge success of this profit-sharing venture between local authorities is just one example of the huge rewards which can be reaped by the public sector when they take seriously the potential in their land and infrastructural assets.

The sale of infrastructure such as the ship canal and those airfields was part and parcel of the neoliberal dogma of the day. The underlying thesis being that the private sector is capable of running almost any service or thing more efficiently. This thesis has driven an array of carrot and stick measures over the years to ‘encourage’ public bodies to sell off their assets, and was vigorously reinforced after Thatcher by New Labour’s Third Way mantra. The end result was growing private sector involvement in public sector asset management and capital projects through Private Finance Initiatives (PFIs), Public-Private Partnerships (PPPs), and Strategic Service Partnerships (SSPs), often involving land.

But as we are seeing in other non-land areas of the economy, the underlying logic behind these policies is false. Within the NHS, since the introduction of the internal market in the early nineties, administrative costs have risen from 6% of the overall budget to 14%. Every major infrastructural investment in the UK now regularly spills over its allocated budget, whether it is Crossrail, HS2, or Hinkley Point. In Mark Farmer’s review of the construction sector, commissioned by government, the lack of vertical integration in our construction sector (caused by an over-reliance on specialist agencies contracted out to perform specific functions) is seen as contributing to a long-term skills shortage, lack of investment in new technology and practices, and lack of competitiveness.

We procure nationalised companies from the rest of Europe to manage our railways at extortionate costs, and procure state-owned Chinese companies to build our next generation of nuclear power plants. The National Audit Office estimates that PFIs cost as much as 40 per cent more than projects which are solely funded by government, an additional burden of £200 billion from the Treasury by the 2040s. The Office for Budgetary Responsibility estimates that PFI debt amounts to around 2.5 per cent of GDP each year.

Privatisation has been catastrophic for the United Kingdom, and the privatisation of land is no different. One of the major justifications for the sale of public land today is to encourage house-building, however the private sector is drastically under-performing relative to the needs of our population. The National Audit Office recently reported that house-building numbers are just over half of government’s 300,000 target, averaging in at only 177,000 new builds per year.

The government’s ‘Letwin Review’ also noted that developers are also consciously refusing to build beyond the ‘absorption rate’ (the level at which new builds can be sold without impacting house-prices more generally). A cabinet office investigation into public bodies over the hoarding of vacant sites found that the private sector was three times more likely to be doing so. This situation was exemplified recently by major house-builder Berkeley and their refusal to increase production despite intense pressure from government. Turkeys don’t vote for Christmas — many developers make large sums of money from an inflated property market, and have no interest in reducing their profits through supplying a decent number of homes.

Birmingham’s city council has been forced to sell £49 million worth of assets to balance the books.

The private sector is also failing to build the types of homes needed by the British people. Research from the New Economics Foundation (NEF) has found that only 1 in 5 homes forecast to be built on formerly public land is expected to be ‘affordable’, as little as 6% is to be social housing and the schedule for building all of this is 12 years behind where it should be.

But despite increasing awareness of these issues, and a near universal rejection of the logic underpinning the trend, the problem is only getting worse. Austerity has turbo-charged public land sales, as public bodies increasingly rely on capital receipts from sales to plug the gaping holes in their budgets.

The NEF report also found that between 342 local authorities’ (out of 353 who were sent a Freedom of Information request) assets worth £9.1 billion were sold to the private sector between 2015–2018. Birmingham City Council has been particularly hard hit, with asset sales of £49 million to help balance the books. The council must still find a further £46 million of savings for the next financial year.

Government continue to fund schemes which incentivise further sales of land. One example is the recently relaunched Homes and Communities Agency, now Homes England, which states in its 2022/23 strategy document that one of its key objectives is ‘unlocking land’ by ‘releas[ing] surplus public sector land for housing’. The document returns recurrently to the theme of ‘disposing’ of public sector land, stating that amongst its priorities for 2018–20 are commitments to

Continue disposing of our surplus public sector land holdings under the government’s Public Sector Land programme 2015–20.

Drive forward the delivery of public sector land by working with other government departments, including through land transfers and partnership working.

Unlock public and private land, with capacity for up to 27,000 homes, by funding on-site infrastructure and land remediation on small sites through our Small Sites Fund.

And,

Unlock surplus local authority land with capacity for up to 32,000 homes by investing in infrastructure and enabling works through our Local Authority Accelerated Construction programme.

In another example, over half of British local authority areas (including Greater Manchester) are now signed up to the ‘One Public Estate’ program, which has received £31 million of government grant.

The scheme’s purported aim is to ‘rationalise’ the public estate between health, local authorities, and other public institutions. The idea is that by pooling estates together, the public sector may strategically develop sites for more efficient use: ‘key worker’ accommodation for public sector staff, geographically targeted facilities, and more. However, a large emphasis of the scheme is also the production of capital receipts to finance public expenditure.

A new company, NHS Property Services, wholly-owned by the secretary of state for health, was established in 2013 to take over, manage, and run the entire NHS property estate. It was assumed that the company would begin to finance the future refurbishment and upgrading of its property portfolio by using ‘income from property sales to fund capital expenditure’. A National Audit Office investigation in 2014 described the core shareholder aims for the organisation as to ‘Make operational savings of at least £57 million by the end of 2015–16’, and ‘Release land sufficient to allow the building of at least 991 new homes by the end of 2014–15, in support of the government’s priority to create 100,000 new homes.’

By the end of 2017, properties totalling £203.3 million had been sold by NHS Property Services.

As of the end of 2017, 295 NHS properties had been sold totalling £203.3 million through NHS Property Services. The company’s plans are bolstered by the Five Year Forward View published in 2014, and the Naylor Review published in 2017. Each emphasise that reduction in the numbers of properties the NHS is operating from as a key objective for the future of the service.

And the trend continues in other areas. Recently, at the behest of the Treasury, Network Rail were forced to relinquish their railway arches to finance their own capital infrastructure program.

Rather than investing to grow, the government is currently fixated on a policy of forcing public bodies to sell off their assets to make essential repairs and maintenance of their infrastructure. Needless to say, this is a completely unsustainable strategy.

Ownership and control of land is one of the most fundamental issues of political power and control in any economy. In 2001, Kevin Cahill estimated that in Britain’s ‘property-owning democracy’ nearly half the country was owned by 40,000 individuals — or 0.06% of the population. The Guardian recently reported that in 2018, 25,000 individuals own over half the country — a huge shift in a little under two decades.

Yet, the concept of land ownership is still relatively new (in historical terms). Most early medieval peasants would have struggled to comprehend the idea that one person could possess exclusive rights to a given stretch of land. Though the feudal system of the Normans provided a strict social hierarchy over land, much of it was still tilled together using strip systems through which all farmers were entitled to a share.

The Great Enclosures of the sixteenth and seventeenth centuries were the mechanism by which these ancient practices were destroyed. But more than simply dispossessing the ordinary people of their common land rights, they also provided a legal and conceptual template for the enclosure of other common resources, from the oceans and fisheries, to raw materials, and intellectual property.

Private ownership of land lies at the historical root of capitalist economics — and is the foundation of its moral philosophy. The establishment of this fundamental historical iniquity at the heart of modern society was the thin end of the wedge for the establishment of property law and capitalist ethics within society at large.

It was fresh and still smarting from these injustices that the Diggers, radicals of the English Civil War, called for the levelling of the land and equalisation of rights for all men. In 1649, Gerrard Winstanley (leader of a commune on George Hill in Cobham, Surrey) wrote

For what you call the Law is but a club of the rich over the lowest of men, sanctifying the conquest of the earth by a few and making their theft the way of things. But over and above these pitiful statutes of yours that enclose the common land and reduce us to poverty to make you fat stands the Law of Creation, which renders judgement on rich and poor alike, making them one. For freedom is the man who will thus turn the world upside down, therefore no wonder he has enemies.

Winstanley’s words ring as true now as they did nearly 400 years ago. Land reform must be at the heart of any truly socialist Labour government’s agenda, both to ensure economic stability for our public sector but also to right the centuries-long injustice which has deprived the many from their birth right.

A new Labour administration must immediately remove legislation which inhibits public bodies from acquiring and disposing of land (including the 1961 Land Compensation Act which prohibits local authorities purchasing land at face market value — forcing them to pay inflated rates). It must also reduce the crippling expenses and lengthy time delays associated with Compulsory Purchase Orders for key regeneration and infrastructure.

But in addition to removing obstacles for public bodies, we must also look to inhibit the capacity of private interests to accumulate and speculate upon land’s abstract value. We must put an end to the economic cycle which sees wealth and growth tied up in a fictitious bubble of asset-price inflation that benefits a small few at great risk to the many.

A Labour government should be looking at land-value taxation and increasing powers to tax empty properties: we should make it unprofitable to hold land vacant against the interests of local communities, bursting the speculative bubble. And we should introduce legislation enshrining the principle of ‘Brownfield First’ into law, protecting our countryside and our environment.

We must also enshrine community-ownership rights over key pieces of infrastructure and cultural heritage assets. We need to be expanding national parks, reforming inheritance laws relating to historic estates, and further entrenching the right to roam for citizens of this country. This means re-visiting the Localism Act, increasing community power to preserve and maintain buildings of cultural heritage or significance.

If realised, the gains could be tremendous. But as ever, fortune will only favour the bold. Our movement must steel itself with the courage and fortitude it will take to ‘turn our world upside down’, to achieve real and meaningful freedom and socialism for all.